University of Manitoba Asper School of Business Department of Accounting and Finance

FIN 3400 - Investment Banking Course Outline Fall 2013

INSTRUCTOR

Name: Sal Pellettieri Phone: (204) 612-1687 Office Location: 374 Drake Email: [email protected] Office Hours: Before class Monday and Wednesday or by appointment.

COURSE DESCRIPTION

The practice and theory of investment banking, including valuation, initial public offerings, mergers and acquisitions, and restructurings.

PREREQUISITES

Required: FIN 2200 with a grade of C+

COURSE OBJECTIVE

The purpose of this course is to introduce students to the world of investment banking, including equity & debt financings, mergers & acquisitions, and leveraged buyouts. Central to all of these is valuation, and as such, the first part of the course will be devoted to covering the valuation methodologies most typically used by investment bankers. The course will have an emphasis on the Global financial markets (with emphasis on Canadian and US financial markets) and will take a very practical approach. In addition to examinations, students will be required to complete a valuation assignment and group project.

COURSE CONDUCT

Students are expected to take responsibility for their learning and take an active role in the learning process. As such, students are expected to come to class prepared and ready to learn, which requires reading and studying the relevant material before class. Part of your grade will be based on in-class participation. Therefore, having read the materials and being able to discuss them is important. Course readings will come from both the assigned textbook as well as other articles which supplement the concepts we’re learning. These additional sources may come from the media or may be academic articles. These will be posted online.

PROFESSIONAL CONDUCT

Students are expected to demonstrate professional conduct for the duration of the course. Some aspects of this include the following: attending each class and arriving on time, staying for the entire class, restricting discussions in class to the current course material, keeping mobile phones in the “off” or “silent” modes, and not placing or answering calls, text messages, or emails during class time. Unprofessional conduct is disruptive to the learning environment and makes mastering the course material more difficult for all students.

REQUIRED MATERIAL

Rosenbaum & Pearl, Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions, John Wiley & Sons, Inc. 2013

Calculator: Programmable financial model

Optional ‘Interesting’ Readings’:

- Fleuriet, Michel “Investment Banking Explained” - Ferguson, Niall “The Ascent of Money: A Financial History of the World” - Damodaran, Aswath “Damodaran on Valuation” - Stewart, James “Den of Thieves”

GRADING AND EXAMINATIONS

Class participation 10% Valuation assignment 10% Midterm exam (in class) 20% Group project 30% Final exam (time and location to be determined) 30%

Final grades are based on the student’s performance on the course evaluation items outlined above, weighted as set out above. Final grades also consider performance relative to other students. Notwithstanding the grading scheme detailed above, students who are absent for more than six classes (without a valid excuse, including proper notice and documentation as detailed below) will receive a grade of F in the course.

Ten percent of the final grade for the course will be based on participation (not merely attendance). Students will need to contribute to class discussion and other in-class activities to earn participation marks. Classes will typically involve discussions of class readings as well as current events pertaining to the theory that we will be learning. Students can earn participation points by engaging in discussions about theory, current events or asking pertinent questions. Participation will be judged at the end of the semester on the basis that I can readily recall your involvement in a number of discussions.

For the valuation assignment, there will be a 10% penalty per day late for late assignments, unless it is due to legitimate reasons, in which case the same principles as outlined below apply (must provide advance notice and have suitable documentation).

Students who miss the midterm exam for legitimate reasons (medical, compassionate, academic conflict or university sports conflict) can apply to have the midterm grade weighting added to the weighting for the final exam (i.e. there will be no make-up exam). Conflicts with employers do not qualify as legitimate reasons to miss exams. In all cases of absence from the midterm exam, the instructor must be advised within 3 working days of the exam date and receive suitable documentation. Students with valid medical excuses must complete and submit the “Medical Absenteeism Form” attached at the end of this syllabus. Both the student and the attending physician must sign this document otherwise the excuse will be deemed invalid. Students who miss the midterm exam without a valid excuse will receive a mark of 0%.

For the group project, part of the grade will be determined by each member’s evaluation of their fellow group member’s participation and involvement. As much as possible, group members should participate equally in the development of the analysis, writing up of the valuation case and oral presentation. Some students may work more on one component than another but this should be agreed upon by group members beforehand. In some cases, if warranted, the instructor reserves the right to assign differential grades to students in the group.

Students are reminded that they must remain available for the entire final exam period. Students who miss the final exam must apply to the Undergraduate Program Office in the faculty for possible deferred examination privileges.

Formula sheets will not be provided for either of the midterm or final exams. Instead, students are permitted to bring in one 8.5” x 11” sheet of paper on which they can write ONLY FORMULAE. Improper formula sheets will be confiscated; offending students will be allowed to complete the exam without any formula sheet. After the exam, offending students will be referred to the Dean’s Office on a violation of academic integrity.

Any student who, because of a disability of any kind, may require some special arrangements in order to meet course requirements should contact either Disability Services at 204-474-6213 or the instructor as soon as possible to make the necessary accommodations.

TENTATIVE COURSE OUTLINE

The outline below is tentative and subject to change based on factors such as learning progression, guest speakers and unforeseen circumstances. It is the student's responsibility to read assigned materials prior to the relevant class. NB – The readings below do NOT include additional readings from outside sources used to supplement the textbook. This will be posted online 1-2 weeks prior to class.

Class # Description Readings 1 Course summary & history of investment banking Valuation 2, 3 Comparable company analysis Intro & Ch1 4, 5 Precedent transaction analysis Ch 2 6, 7, 8 Discounted cash flow analysis & risk analysis Ch 3 Valuation Assignment 9 & 10 Valuation of special companies (start-ups, bankrupt, spinoffs) Handouts Midterm Exam (in class #11) 12- 14 Leveraged Buyout analysis Ch 4 & 5 15 Market analysis and group project discussion 16 Sell side M&A Ch 5 17 Buy side M&A Ch 6 18 Excel and Bloomberg tutorials Handouts 19 & 20 Public equity, debt financing and Exotic financing Handouts 21 – 23 Group presentations 24 Course review, guest speaker?

ACADEMIC INTEGRITY

It is critical to the reputation of the I. H. Asper School of Business and of our degrees that everyone associated with our faculty behaves with the highest academic integrity. As the faculty that helps create business and government leaders, we have a special obligation to ensure that our ethical standards are beyond reproach. Any dishonesty in our academic transactions violates this trust. The University of Manitoba Undergraduate Calendar addresses the issue of academic dishonesty under the heading “Plagiarism and Cheating.” Specifically, acts of academic dishonesty include, but are not limited to: • using the exact words of a published or unpublished author without quotation marks and without referencing the source of these words • duplicating a table, graph or diagram, in whole or in part, without referencing the source • paraphrasing the conceptual framework, research design, interpretation, or any other ideas of another person, whether written or verbal (e.g. personal communications, ideas from a verbal presentation) without referencing the source • copying the answers of another student in any test, examination, or take-home assignment • providing answers to another student in any test, examination, or take-home assignment • taking any unauthorized materials into an examination or term test (crib notes) • impersonating another student or allowing another person to impersonate oneself for the purpose of submitting academic work or writing any test or examination • stealing or mutilating library materials • accessing tests prior to the time and date of the sitting • changing name or answer(s) on a test after that test has been graded and returned • submitting the same paper or portions thereof for more than one assignment, without discussions with the instructors involved

Group Projects and Group Work Many courses in the I. H. Asper School of Business require group projects. Students should be aware that group projects are subject to the same rules regarding academic dishonesty. Because of the unique nature of group projects, all group members should exercise special care to ensure that the group project does not violate the policy on Academic Integrity. Should a violation occur, group members are jointly accountable unless the violation can be attributed to a specific individual(s).

Some courses, while not requiring group projects, encourage students to work together in groups (or at least do not prohibit it) before submitting individual assignments. Students are encouraged to discuss this issue as it related to academic integrity with their instructor to avoid violating this policy.

In the I. H. Asper School of Business, all suspected cases of academic dishonesty are passed to the Dean’s Office in order to ensure consistency of treatment. UNIVERSITY OF MANITOBA I. H. Asper School of Business Medical Absenteeism Form

Student Identification: (please print clearly)

______Last Name First Name Middle Initial U of M Student Identification Number

I hereby authorize ______to verify with the attending physician or his/her (Name of Instructor/Administrator) staff or colleagues that the contents of this form are true.

______Student’s Signature Date

To be completed by the attending physician: (after the above section is completed)

______Physician’s Last Name (please print clearly) Physician’s First Name Middle Initial

______Street Address City, Province Postal Code

______Telephone Number Fax Number

To the attention of the physician: Your evaluation of the student’s condition is being used for the purpose of determining whether or not the student has a valid reason to miss an important exam or assignment. Your professional evaluation is necessary to ensure that only valid cases are excused.

I certify that the nature of the student’s condition is severe enough to prevent the student from taking an exam or completing an assignment. If requested, my associates or I will verify for the above-named instructor/administrator that this information is accurate.

The student’s condition will likely span the following dates: ______(indicate start date)

until ______(indicate end date)

______Physician’s Signature Date

Notes to physician:  Please make a note in the student/patient’s file indicating that the student has given the above-named instructor/administrator permission to verify with you, your staff, or your colleagues, that the information contained on this form is correct. Thank you for your professional evaluation of this student’s condition.  PLEASE ATTACH THIS FORM TO YOUR REGULAR OFFICE STATIONERY THAT INDICATES THE STUDENT VISITED YOUR OFFICE. Note to student:  The use of this form is at the option of the student. However, in order to obtain an excused absence for an assignment or exam, the student must obtain a doctor’s certification that the student’s condition is severe enough to prevent the student from taking the exam or completing the assignment.  It is NOT SUFFICIENT to provide a note that only indicates the student visited the doctor’s office.